On May 31, Henry J. Maier will settle into the job of his life.
On that date, Maier becomes president and CEO of FedEx Ground, the ground parcel unit of FedEx Corp. Maier will succeed David F. Rebholz, who will retire after 37 years at Memphis-based FedEx. Rebholz spent six years running the highly successful Ground division, which has become the company's growth engine and will be increasingly important in shaping its future.
As expected, Rebholz's successor comes from within. Maier is currently FedEx Ground's executive vice president, responsible for strategic planning, corporate communications, and contractor relations. He has spent 25 years at FedEx in various high-level positions.
Besides the FedEx Ground operation, Maier will also run FedEx Home Delivery and FedEx SmartPost, through which it funnels mostly e-commerce shipments to the U.S. Postal Service for "last-mile" delivery to residences. By virtue of his new position, he will become arguably the most important executive at FedEx outside of the five-person executive committee helmed by Frederick W. Smith, the company's founder, chairman, president, and CEO.
"Henry has vast experience going back to the early days of FedEx Ground and has played a leading role in shaping the incredible long-term success of the company," Smith said in a statement late yesterday.
The Ground and SmartPost businesses will receive much more attention and resources in coming years. As part of a major revamp announced in October, FedEx Ground will expand its capacity to handle 45 percent more shipments by its 2018 fiscal year. In addition, FedEx will increase SmartPost's capacity by 85 percent over that time, a move that reflects the projected explosive growth in the volume of merchandise ordered online.
FedEx entered the ground parcel segment in 1998 when it acquired Caliber Systems Inc., the parent of Roadway Package System, at the time the only legitimate competition to UPS Inc. for domestic ground parcel deliveries.
Re-branded as FedEx Ground, the unit over the years has chipped away at UPS' once -dominant position in the category. The ground parcel market grew annually by a .5- percentage point from 2001 to 2011, according to data from The Colography Group Inc., an Atlanta-based research and consulting firm. FedEx Ground gained 1-percentage point of share annually during that period, while UPS lost 1-percentage point of share, according to the data. Most of FedEx's share expansion came at the expense of UPS, the consultancy said.
In 2011, 60 percent of FedEx's domestic volumes, on a point-of-sale basis, moved on the ground, according to The Colography Group. In 2001, it was about 40 percent.
Demand for ground parcel services is expected to remain solid as businesses reconfigure their distribution networks to emphasize more regional, shorter-haul deliveries that can be moved quickly via ground instead of higher-cost air services.
As part of its revamp, which is projected to save $1.7 billion in annual costs over the next two to three years, FedEx will scale back its capital investment in air freight and focus on ways to make its FedEx Express air and internal operations more efficient. About $1.65 billion in annual cost-savings are expected to come from the FedEx Express unit, according to FedEx.